Santos on track to meet production targets

Santos' full year net profit has dropped by nearly a third but the oil and gas producer still expects to meet its production targets in 2013.

Net profit for the full year to December 31 fell to $519 million from $753 million in 2011, when Santos benefited from various asset sales.

Revenue rose 18 per cent to $3.3 billion.

Underlying profit rose 34 per cent to $606 million, driven by higher liquids volumes and gas prices which were partly offset by higher costs linked to new assets.

Santos confirmed it still expects to meet its production forecast for 2013 of 53-57 million barrels of oil equivalent (mmboe) and capital expenditure of about $4 billion.

The company maintained its fully franked final dividend at 15 cents a share.

Santos chief executive David Knox said the company achieved its highest oil production in four years during 2012.

Production increased by 10 per cent, driven by new assets in Western Australia and Vietnam, and strong Cooper oil production.

"We expect a further lift in production in 2013," he said in a statement on Friday.

Mr Knox said Santos' LNG projects remained on schedule, with its Papua New Guinea LNG joint venture project on track to start production in 2014 and the GLNG project in Queensland a year later.

Capital costs for both projects were unchanged, he said.

The company's main LNG development project is the $18.5 billion Santos-operated Gladstone LNG project on the Qld central coast, which is part of a suite of coal seam gas-to-LNG projects in the region.

Santos in January said its production costs blew out by up to $50 million in 2012, highlighting the risks to its massive Queensland Gladstone LNG project.

At the time, Santos said production costs were expected to be about $660 million, above previous guidance of $610 million to $640 million.

Meanwhile, Santos expects to pay $45-$65 million towards the federal government's carbon tax for the 12 months from July 1, 2012.

However, it expects to recoup most of the carbon costs through domestic sales agreements and an allocation of free carbon permits to be issued under the jobs and competitiveness program of the legislation for LNG operations.

Santos' results included a $106 million charge linked to impairment losses on its Sangu assets in Bangladesh and its Thevenard Island asset.

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